Elon Musk (TSLA) successfully dismissed a lawsuit alleging he refused to pay over $500 million in severance to thousands of Twitter employees laid off after he acquired the company, now called X.
On Tuesday, U.S. District Judge Trina Thompson in San Francisco ruled that the former employees’ claims were not covered by the federal Employee Retirement Income Security Act and that she lacked jurisdiction.
The judge determined that X did inform terminated employees that the previous severance plan was no longer valid and that Musk’s cash-only severance plan was the only option available.
“Following the takeover or merger, only cash payments were guaranteed. There were no commitments to continue healthcare benefits or to provide outplacement services through a third party,” the judge’s decision ruled.
The judge stated that McMillian can still file a new, amended lawsuit against Musk if she believes there has been a breach of contract or other violations, but she cannot rely on the ERISA law for support.
This amended filing could be linked to one of three other ongoing cases from other laid-off Twitter employees who are also suing Musk and X for similar reasons.
Plaintiffs Courtney McMillian, former head of Twitter’s compensation and benefits, and Ronald Cooper, an operations manager, claimed that Twitter offered only one month of severance pay without any benefits to the terminated employees.
In a separate case, a record $7 billion in attorneys’ fees for three law firms that successfully contested Elon Musk’s $56 billion Tesla compensation package has set a precedent for incentivizing lawyers to hold corporate boards accountable.
An attorney for a company shareholder highlighted this during a hearing before a Delaware judge on Monday. The hearing lasted more than six hours as legal teams debated the appropriate fee for the law firms representing Richard Tornetta, who sued over Musk’s pay package in 2018 when he owned nine shares of Tesla.
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